On Thursday, Cracker Barrel Old Country Store Inc. will hold a meeting for securities analysts and institutional investors at its home office in Lebanon.
As part of the presentation, senior executives from the company will present an update to the priorities and initiatives underlying Cracker Barrel’s “Enhance, Expand, Extend” strategy in order to continue to generate long-term value for shareholders:
• Enhance the core: Continue to drive traffic at its existing stores by continuing the focus on the diversity of its menu offerings, expanding the demographic reach of the Cracker Barrel brand, leveraging technology to enhance its guests’ experience, and utilizing more targeted advertising campaigns and channels; continue to increase the average check by selectively adopting tiered pricing across its geographies; and further increase its operating margins by re-engineering certain store processes.
• Expand the footprint: Continue prudent, yet profitable new growth employing proven site selection tools; introduce a new, more efficient “Fusion” store prototype.
• Extend the brand: Build on the initial success of Cracker Barrel’s licensing initiative to expand the products offered and channels served.
As part of the initiatives, Cracker Barrel will also outline a new three-year cost optimization program intended to generate at least $50 million in annual operational expense savings by fiscal year 2017. The program is focused on enhancing labor productivity, further improving store management and operations, and capturing utilities savings.
The company believes the above initiatives will result in about 4 percent annual top-line growth and, net of higher advertising, wages and benefits costs, an approximate 100 basis point improvement in operating margin by fiscal year 2017.
Comparable store traffic and sales in March and April also reflect the later Easter holiday compared to the prior year period. As a result of these impacts, the company is lowering its previous third quarter earnings guidance, and now expects to report earnings per diluted share of between $1.18 and $1.23. The company notes this guidance does not include expenses related to the April 23 special meeting of Cracker Barrel shareholders.
As a result of the board and management’s confidence in the company’s strategy, and in keeping with its focus on delivering shareholder value, the company also announced its board of directors declared a quarterly dividend of $1 per share on the company’s common stock, reflecting an increase of 33 percent compared to the previous quarter’s dividend, and a more than 350 percent increase compared to the last dividend prior to the announcement of the company’s strategic priorities in September 2011. The dividend is payable Aug. 5 to shareholders of record as of July 18.
“As we discussed in our second quarter conference call, the severe winter weather continued into our third quarter, negatively impacting our traffic and sales,” said Sandra B. Cochran, president and chief executive officer of Cracker Barrel. “Additionally, we believe consumers remain economically challenged, our competitors have become increasingly promotional, and overall automobile travel – which disproportionally affects our business – continues to be soft. Nevertheless the continued execution of our strategic plan, along with our strong cash flow generation, provided the board with the confidence to increase the quarterly dividend for the fifth consecutive year. We look forward to discussing these plans at [Thursday’s] analyst and institutional investor meeting.”
Thursday’s presentations are scheduled to begin at 9 a.m. The company expects the presentations to conclude by about 12:30 p.m. A live webcast of the presentation will be available online in the events area of the company’s website at investor.crackerbarrel.com. An online replay of the webcast will be available until May 15.
Cracker Barrel Old Country Store was established in 1969 in Lebanon and operates 627 company-owned locations in 42 states. For more information, visit crackerbarrel.com.